MESERS VKL BUILDCON(INDIA) PRIVATE LIMITED,BHILAI vs. INCOME TAX OFFICER, WARD-1(1), BHILAI

The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals)-II, Raipur (C.G.) dated 10.10.2019, which in turns arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 04.11.2017 for assessment year 2015-16. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. In the facts and circumstances of the case and in law the ld. Commissioner of Income (Appeals) has erred in confirming addition of Rs.3,71,749/- as unsubstantiated trading liability despite it was subsequently discharged which is against the settled legal position.

During the course of the assessment proceedings, it was, inter alia, observed by the A.O that the assessee had in its balance sheet for the year under consideration i.e. A.Y. 2015-16 shown a liability of Rs. 6,74,399/- under the head “Trade payables” against the name of one Sh.Bachha Singh. On being queried the assessee furnished a ledger account of Sh.Bachha Singh (supra) as appearing in its books of accounts, which revealed an opening balance of Rs. 3,02,650/- (Cr.) and a closing balance of Rs. 6,74,399/-(Cr.). On a perusal of the aforesaid account it was observed by the A.O that the assessee had claimed to have purchased certain material i.e. boulders from the aforementioned person. Observing, that the assessee had not made any payment to the aforementioned supplier during the entire year the A.O was of the view that it was beyond comprehension that any party would supply goods without receiving any payment for more than one year. Apart from that, it was observed by the A.O that the stock statement of construction material that was furnished by the assessee did not reveal any stock of boulders. On the basis of his aforesaid observations the A.O held a strong conviction that the assessee had not made any purchases from 4 M/s. VKL Buildcon (India) Private Limited Vs. ITO-1(1), Bhilai the aforementioned party. Supported by the fact that the aforesaid claim of impugned purchases was not supported by any vouchers the A.O held the entire amount of impugned purchases of Rs. 6,74,399/- (supra) as bogus and added the same to the assesse’s returned income. Accordingly, the A.O vide his order passed under Sec. 143(3), dated 04.11.2017 after, inter alia, making the aforesaid addition assessed the income at Rs. 30,75,730/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). Although the CIT(A) principally concurred with the dubbing of the impugned purchases as bogus by the A.O, but taking cognizance of the fact that the addition so made comprised of an opening balance of Rs. 3,02,650/- (Cr.) which could not have been added during the year under consideration, thus, vacated the addition to the said extent and sustained the balance addition of Rs. 3,71,749/-.

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

We have heard the Ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, it is a matter of fact borne from record that the assessee had failed to substantiate the authenticity of the purchases of boulders amounting to Rs. 3,71,749/- that was claimed to have been made during the year from the aforementioned party, viz. Sh. Bachha Singh. Except for harping upon the ledger account of the aforementioned party as appearing in its books of accounts the assessee had failed to place on record any documentary evidence which could irrefutably substantiate its claim of having incurred the aforesaid expenditure. Fact that the stock statement of construction material did not reveal any stock of boulders further fortifies the conviction of the lower authorities who had dubbed the impugned purchases as bogus. Also, the fact that in the course of the assessment proceedings no vouchers were produced by the assessee to substantiate the genuineness of the aforesaid claim of expenditure further raises serious doubts as regards the veracity of the claim of the assessee. As the assessee in the course of the proceeding before the lower authorities

Resultantly, finding no merit in the appeal of the assessee we dismiss the same. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board.